Key Takeaways
- • Crypto broker Voyager Digital Ltd. said hedge fund Three Arrows Capital Ltd. defaulted on loan payments tied to its large digital-currency bets, according to the Wall Street Journal.
- • Three Arrows owes Voyager the equivalent of $675 million in cryptocurrencies, comprising 15,250 bitcoin and $350 million in USD Coin, a dollar-pegged stablecoin.
- • Voyager had warned it would issue a notice of default if the fund did not repay the loan by Monday, the deadline that has now passed.
- • The default highlights counterparty exposure in crypto lending and the strain on leveraged crypto funds that have suffered heavy losses.
Summary
Crypto broker Voyager Digital Ltd. said that hedge fund Three Arrows Capital Ltd. had defaulted on a loan, failing to make payments tied to large bets in the digital-currency market, according to the Wall Street Journal. The disclosure, dated June 27, 2022, points to mounting stress at Three Arrows, which has suffered heavy losses.
The loan totals $675 million. Three Arrows borrowed 15,250 bitcoin and $350 million in USD Coin, a stablecoin whose value is pegged to the U.S. dollar, from Voyager. Voyager had previously said it would issue a notice of default if the hedge fund did not repay the loan by Monday.
The case underscores the counterparty risk embedded in crypto lending, where brokers extend large, collateral-light or stablecoin-denominated credit to leveraged trading firms. For institutional allocators, the episode illustrates how losses at a single fund can transmit to lenders and other market participants, and it signals potential further pressure on digital-asset lenders with concentrated exposures.
The loan totals $675 million. Three Arrows borrowed 15,250 bitcoin and $350 million in USD Coin, a stablecoin whose value is pegged to the U.S. dollar, from Voyager. Voyager had previously said it would issue a notice of default if the hedge fund did not repay the loan by Monday.
The case underscores the counterparty risk embedded in crypto lending, where brokers extend large, collateral-light or stablecoin-denominated credit to leveraged trading firms. For institutional allocators, the episode illustrates how losses at a single fund can transmit to lenders and other market participants, and it signals potential further pressure on digital-asset lenders with concentrated exposures.
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